- India and the World Economy, 1757–1947
- Battles Half Won: Political Economy of India's Growth and Economic Policy Since Independence
- Estimating Rural Poverty: Distributional Outcomes, Evaluations, and Policy Responses
- Microfinance: The Shg-Linkage Program
- Microinsurance: A Case Study of the Indian Rainfall Index Insurance Market
- Caste and Upward Mobility
- Performance of Indian Manufacturing in the Postreform Period
- Informal Sector and the Developing World: Relating Theory and Evidence to India
- Structural Transformation and Jobless Growth in the Indian Economy
- Development, Displacement, and Food Security: Land Acquisition in India
- Reforming Primary and Secondary Schooling
- Higher Education Reforms in India
- Health and Health Care Policy in India: The Case for Quality of Care
- Population Dynamics in India and Implications for Economic Growth
- The Dynamics and Status of India's Economic Reforms
- Political Economy of Infrastructure Spending in India
- Aspects of Bureaucratic Corruption
- Distributive Conflicts and Indian Economic Policy: Some Notes On Political Economy
- Economic Growth and Ecological Sustainability in India
- Fiscal Rules in India: are they Effective?
- Financial Frictions and Monetary Policy Transmission in India
- Monetary Policy, Capital Flows, and the Exchange Rate
- India's Trade and Exchange-Rate Policies: Understanding the Bop Crisis and the Reforms Thereafter
- Domestic Financial Sector Reforms
- The Convergence Debate and Econometric Approaches: Evidence from India
- The Globalization Debate and India
- India at the WTO: From Uruguay to Doha and Beyond
- An Estimated DSGE Model of the Indian Economy
- Development Patterns in China and India: Perspective with A Ces Production Function
- What More do we want to know about the Indian Economy?
Abstract and Keywords
This article first takes stock of what we know about the patterns observed in Indian development and speculates on the likely scenarios over the next few decades. The main question that the article concerns—and probably the biggest economic policy challenge today—is why has poverty in India declined so slowly? The article suggests that a proximate cause is the size and productivity levels of the informal sector—a bulk of India's labor force is engaged in low-productivity cottage-type activities with little physical or human capital. This hinders productivity. What then is responsible for the existence and continuation of constraints in the informal sector? If the poor incidence of entrepreneurship in the informal sector is because of poor infrastructure and weak financial inclusion, why have governance structures failed to alleviate these constraints? In addition, the formal sector has not expanded at the expense of the informal sector to absorb a greater part of the labor force. The article discusses a host of factors that could explain obstacles to productivity improvements in the informal sector, and hence the low growth–poverty elasticity: caste, collective action, the political economy of Indian democracy, the role of credit markets, and rural urban migration, among others.
Ashok Kotwal, Department of Economics, University of British Columbia, Canada
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